Business Reporter

The Australian sharemarket closed lower, dragged down by a late plunge in Fortescue Metals.

Reports suggest the iron ore miner has contacted its lenders and may be struggling to meet its debt repayment requirements.

The S&P/ASX200 index fell 21.9 points, or 0.5 per cent, to 4339.4, while the broader All Ordinaries fell 23.3 points, or 0.5 per cent, to 4359.8.

The materials sub-index dropped 0.7 per cent, while financials and energy both lost 0.4 per cent. Telecommunications was the only sub-index to post gains, adding 0.5 per cent.

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Stocks in iron ore miner Fortescue spiralled down during the final half hour of trade, finishing down, 48 cents, or 13.83 per cent, to $2.99.

BBY analyst Mike Harrowell said ‘‘the penny was dropping’’ among investors about the precarious position Fortescue was in.

If Fortescue breached its loan agreements, all of its debt, around $9 billion gross, would be payable immediately.

‘‘Once you’re in breach of your [covenant] ratios, all debt is payable,’’ he said.

BHP dropped 7 cents, or 0.21 per cent, to $32.78 while Rio Tinto lost 4 cents, or 0.07 per cent, to $55.05.

The market had been trading slightly lower before the drop from Fortescue, as investors wait on a US Federal Reserve meeting, where chairman Ben Bernanke is expected to announce a new round of quantitive easing.

‘‘It does seem like there was a lot of positioning ahead of the FOMC meeting, no one really wants to over commit, they’re not too sure what’s happening,’’ said Stan Shamu, market strategist at IG Markets.

Mr Shamu said investors want more details from Mr Bernanke on how the Federal Reserve will action QE3.

‘‘Judging from recent price action in the market, it seems like everyone is trying to price in a positive outcome,’’ Mr Shamu said.

All the big four banks posted losses today, Westpac dropped 16 cents, or 0.7 per cent, to $23.80, NAB lost 12 cents, or 0.5 per cent, to $25.28, CBA fell 4 cents, or 0.1 per cent and ANZ slipped 6 cents, or 0.25 per cent, to $24.14.

Myer reported a full-year earnings fall of 14.3 per cent, marginally better than it’s guidance of 15 per cent provided earlier this year.

The stock suffered as the department store failed to provide any plans to tackle the tough retail environment, dropping 2 cents, or 1.1 per cent, to $1.83.